Top 250+ Solved Auditing MCQ Questions Answer
Q. Which of the following statements is not true about continuous audit?
a. It is conducted at regular interval
b. It may be carried out on daily basis
c. It is needed when the organization has a good internal control system
d. It is expensive
Q. Internal check is carried on by
a. Staff specially appointed for the purpose
b. Internal auditor
c. Supervisor of the staff
d. Members of the staff
Q. Errors of Omission are
a. Technical errors
b. Errors of principle
c. Compensating errors
d. None of the above
Q. Window dressing implies:
a. Curtailment of expenses
b. Checking of Wastages
c. Under valuation of assets
d. Over Valuation of assets
Q. Test Checking refers to
a. Testing of accounts and records
b. Checking of selected number of transactions
c. Examination of adjusting and closing entries
d. Checking of all transactions recorded
Q. Which of the following statements is not correct about materiality?
a. Materiality is a relative concept
b. Materiality judgments involve both quantitative and qualitative judgments
c. Auditor’s consideration of materiality is influenced by the auditor’s perception of the needs of an informed decision maker who will rely on the financial statements
d. At the planning state, the auditor considers materiality at the financial statement level only
Q. …...the audit risks… the materiality and ……the audit effort
a. Lower, Higher, Lower
b. Lower, Lower, Higher
c. Higher, Lower, Lower
d. Lower, Higher, Higher
Q. When issuing unqualified opinion, the auditor who evaluates the audit findings shouldbe satisfied that the
a. Amount of known misstatement is documented in working papers
b. Estimates of the total likely misstatement is less than materiality level
c. Estimate of the total likely misstatement is more than materially level
d. Estimates of the total likely misstatement cannot be made
Q. In determining the level of materiality for an audit, what should not be considered?
a. Prior year’s errors
b. The auditor’s remuneration
c. Adjusted interim financial statements
d. Prior year’s financial statements
Q. Analytical procedures issued in the planning stage of an audit, generally
a. Helps to determine the nature, timing and extent of other audit procedures
b. Directs attention to potential risk areas
c. Indicates important aspects of business
d. All of the above
Q. Which of the following statements is most closely associated with analytical procedureapplied at substantive stage?
a. It helps to study relationship among balance sheet accounts
b. It helps to discover material misstatements in the financial statements
c. It helps to identify possible oversights
d. It helps to accumulate evidence supporting the validity of a specific account balance
Q. For all audits of financial statements made in accordance with AAS14, the use ofanalytical procedures is at the discretion of the auditor in which stage?
a. Substantive testing
b. Planning stage
c. Overall review stage
d. All of the above
Q. Verification refers to :
a. Examining the physical existence and valuation of assets.
b. Examining the journal and ledger
c. Examination of vouchers related to assets.
d. None of the above.
Q. Stock should be valued at
a. Cost
b. Market price
c. Cost or Market price whichever is lower.
d. Cost less depreciation.